ICE Coffee Futures close 460 points lower on speculative liquidation
Ice Arabica futures drifted lower today as a result of speculative profit taking following Friday’s rally. Despite the 170-168 level providing good support for the market throughout yesterday’s session, the market failed to hold that level today, with speculative liquidation sending the market tumbling down to test the 165.00 level, where it met some industry buying. Traded volume was 18,148 lots and open interest was down 213 contracts as of July 21st. In other news, The Tanzania Coffee Board announced that the country’s coffee production for 2014-2015 is expected to rise 26.7% to 1.030 million bags. The sharp increase is attributed to the biennial cycle and an “on-year” for coffee production. London - 91 lots were graded this morning with the working exposure in July still holding above 2,000 lots entering today down only 9 lots from yesterday. The overall exposure reflects new involvement down the board to increase the open position to 97,422 lots. Prices again showed little interest into positive numbers before edging lower in light turnover. Business in the switch market increased but showed little change in value with the arbitrage holding above the 80 cent premium during the morning before weakening into the second part of the day driven by “C” Contract weakness. London lost traction triggering intraday selling which was enough to elect stops below 2000 into the afternoon. Volume was better in the leg lower but overall activity still lacking. As the market organises for the expiry of July at the end of next week the focus begins to build on the September exposure. The compilation of the 55,000 lots open in September does carry a mixture of longs from arbitrage/spec/Index and still has a decent volume of unfixed origin interest with the short made up of primarily hedges. Prices held the 1980 marker in September but was not able to re-establish the upside formation. This was an important move suggestion a downside washout into the balance of the week!
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The currency markets are likely to be looking towards the year on year inflationary updates for the States in June which will be released later today. Expectations are unchanged from the previous month at 2.10%. Some analysts are suggesting an increase. Oil was a dollar higher to close at $104.14 with Gold up almost $4 an ounce at $1,315 with the CRB ending the day at 298.27 below the important 300 marker as we look towards month end next week. Volume in New York was low again just over 13,000 lots. Prices did probe lower which pulled in an array of short selling as levels tested below the 170 area in September. The action created a vacuum from which levels bounced well into the last third of the session to record minor gains in the day as levels operate back into the recent range. Stocks continue to rise as reflected in the recent GCA update and the certified stocks hold around 2.50 million bags. Little to no news from Brazil as the harvest moves on with the general perception yields are between 10/20% lower but little supporting information. Prices are soft and export numbers impressive during the low consumption period. The market continues to take on this negative blanket looking for opportunities to sell rallies. Arbitrage has been important as the premium rallies back above 80 cents bases September will take over spot position today after the expiry of July yesterday which opens a downside gap! London could not take advantage of the rally in New York Friday struggling to gather any upside momentum into the session but at least holding the 2000 marker which maintains the upside interest. The open position continues to work lower with a decent open position in July to be watched being over 2,000 lots. Coffee has been re-tendered last week which softened concerns and helped settled the structure for the moment. Origins have provided overhead interest but are slow to react to the hesitation in the recent rally. Arbitrage shorts could become an issue as the premiums moves wider which accounts for a decent long for London over the last few weeks. By Mark Brown / Int'l FC STONE |
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